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Fisher-Price Toys, Inc

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Fisher-Price Toys, Inc.

Fisher-Price, a toy company that was founded in 1930, was known for its durable, safe, high-quality, and fun products sold at low to moderate prices, and had established itself as a leading producer of toys over the years. In fact, 82.7% of participants in a Redbook study named Fisher-Price the brand of pre-school toys that they buy the most often. In the summer of 1970, marketing vice president Jack Asthalter found himself confronted with a difficult decision: whether to produce a new ATV Explorer toy. Ashalter’s production staff had just informed him that the ATV Explorer could no longer be profitably distributed at the preconceived price of $12, and would need to be sold at a price of $18.50 after markups. Asthalter was unsure whether there would be sufficient demand for the ATV at this new price, as all concept tests and market research sessions had been conducted with the idea that the ATV Explorer would be sold at a retail price of $12. Additionally, because most of Fisher-Price’s toys were priced below $5, internal opposition would need to be overcome in order to manufacture the toy.
Ashalter had several options: produce the ATV Explorer and sell it at $18.50; lower the price by removing a part but in the process sacrifice quality, going against traditional company policy; market and advertise the ATV Explorer as a single item rather than as part of a line of toys; milk the ATV Explorer and increase the price by $.50 or a $1 and use the added profits to support increased promotion; or simply not produce the ATV Explorer at all. My recommendation is that Fisher-Price should not produce the ATV Explorer toy. While the new toy had potential, there were already many successful riding toys in the market. Playskool, Fisher-Price’s biggest competitor, for example, offered six riding toys in 1970 alone, and many smaller firms had…...

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